The Big Inflation Warning Hidden In This Morning's Philly Fed Release

The Business Insider ^ | 1/20/2011 | Gregory White

[FromLori]

Today's Philly Fed survey data missed expectations and was a steep drop from last month's eventually revised down heights.

But what is most worrying in this release is the sharp increase in survey responders expecting to pay more for inputs in the future.

From the Philly Fed (emphasis ours): Price increases for inputs as well as firms’ own manufactured goods are more wide‐ spread this month. Fifty‐four percent of the firms reported higher prices for inputs, compared with 52 percent in the previous month. The prices paid index, which increased 6 points in January, has increased 42 points over the past four months. On balance, firms also reported a rise in prices for manufactured goods: More firms reported increases in prices (26 percent) than reported decreases (9 percent), and the prices received index increased 8 points, its second consecutive positive reading.

That increase over the last four months means that, yes, if Bernanke and the Fed are trying to create inflation it is working. But if businesses can't pass on those increasing prices to consumers, they may have a problem. Also worrying, firms still don't think there is demand in the market for their goods, so they are not hiring.

[FromLori]

Related

The Market Just Took A Dramatic Dive On The Philly Fed Data

Read more: http://www.businessinsider.com/the-market-just-took-a-dramatic-dive-on-the-philly-fed-data-2011-1#ixzz1BaxM0d1c

[KSCITYBOY]

btt for later

[freedomfiter2]

So the FED floods the market with money that pushes down the dollar’s value and then raises interest rates to fight inflation.

[SaxxonWoods]

Dollar is up today. China’s currency is said to be undervalued 40%, giving China an unfair advantage, and giving America problems.

I wonder if on forums in China they post little crashing and burning airplanes made of the Yuan? I mean, they are destroying their currency! Oh Noes!